At first, I was going to skip Ch 3 (Sources of Information) because the material seemed so dated. But, I reconsidered after taking notes and thinking on them for a little while. This chapter is about research and, though our research sources differ greatly from those available to Graham and Dodd, the chapter's message - find good research sources and use them - is still relevant.

Chapter 3 gives us a nice snapshot of the horror that was security analysis in the days before significant securities regulation. We now have (justified) complaints about selective disclosure and options accounting tricks. In those days, these were just the surface of an analyst's problems, however. Imagine trying to analyze a company with no regular or standard reporting system, in which some companies reported only annually, gave only random sales numbers (or earnings numbers) and in which Income Statements were rare and Statements of Cash Flows rarer.

Every so often the Government does something right (or at least in the right direction).

The crash of the late 20s and early 30s, and the subsequent flight from equity markets, led to the implementation of better reporting standards, which in turn assisted an eventual return of capital to equities. Standards didn't eliminate speculation, nor should that be the expected result, but they helped one understand the nature and scope of one's speculation.

Enough history. Security Analysis is an interesting history text, but (so far) a better handbook for analyzing securities in any time. In Chapter 3, G & D expand on an earlier message - that one must perform extensive study of the company (or other issuer of the security in question) in order to determine the quality of the investment. For common stocks and corporate bonds (and convertibles, preferreds, etc), one must understand the company and the industry in which it operates. So how do we do that in today's environment of excessive information?

My current method is to come up with a complete list of publicly held competitors to the company I am analyzing. I go to:

Then I type in the ticker symbol under "Get Quotes and Research". Then I click on "Compare Stock to competitors." I click on "Show all competitors" and then start comparing various data (from various sites) for as many or all of these that I choose. When I've narrowed my list of key competitors, I review SEC documents for each.

These are available on many sites, including the Fool, Quicken, and - my favorite - Free EDGAR at:

In the SEC documents one often finds not only information relevant to the company, but often industry and competitors. After reading the SEC documents for a company and its key competitors, one now has myriad choices for performing analysis on a company or industry.

We can find dozens of web-based sources of basic data like recent sales, earnings, P/E, and (especially, and least useful) historic share price; but it's harder to find deeper, industry-specific measures and sources of qualititave information on a company or industry.

I'd be interested in developing a list of quality (especially free), industry-specific information sources that people have found. As an example, when investigating REITs, I found the National Association for Real Estate Investment Trusts website at:

Another source of qualitative information, more in lines with Philip Fisher style scuttlebutt analysis, are the various message boards (especially here at the Fool and at Yahoo!). While there is lots of noise on many boards, I've also found very useful information that helps me understand a company and its industry. A prime example is the Fool.com Berkshire Hathaway board, where one can learn the intricate details of a company that is extremely difficult to analyze on one's own. The Yahoo! BRK board is also good, though there is far more noise. I highly recommend the Berkshire boards, not just to understand BRK, but to read the insights of some experienced investors and to learn about various industries, especially the insurance industry.

On some boards I have also found messages that provide key information on an industry from those who work in that industry (or, in some cases, those who work in the company itself). Sometimes there are notes from an annual meeting, conference call, or discussion with a company's Investor Relations department (or, better still, a mid-level manager or employee). One can also find messages from those who have used a company's products or services. All of these can help round out one's picture of a company, which can then lead to better projections of growth and intrinsic value. I wish the message boards were used more often for this type of discussion, rather than name-calling and griping about share prices.

Finally (or, maybe, firstly) one can go directly to the source. Company websites are often the best source for information on a company's products and market. And one can always call the company itself to ask more pointed questions, as suggested by Graham and Dodd.

Please post any great industry or company research methods and/or sites you have found.

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